House prices are officially STILL rising (but only just): ONS reveals annual growth of 0.2%

House prices are still officially rising, with the ONS showing that average sold prices increased by 0.2 percent in the twelve months to August.

The average house price was £291,000 in August 2023, little changed from twelve months ago, but £9,000 above the recent low in March 2023.

Although sales prices remain positive, house price growth has been slowing since July last year, when prices rose by as much as 13.8 percent.

There are also small differences depending on where in Britain people live.

House prices were flat in England at £310,000 in the 12 months to August. Meanwhile, typical prices in Wales fell 0.1 per cent to £217,000 and rose 1.1 per cent in Scotland to £194,000.

The North East had the highest annual percentage change of any English region in the 12 months to August 2023, rising 3.6 per cent, while the East of England fell 1.6 per cent.

Will house prices start to fall?

All leading indicators point to house prices going down.

Separate house price indices from Nationwide and Halifax report that house prices have already started to fall.

These relate to their own approved mortgage applications and are therefore slightly ahead of the ONS sales figures. However, they do not include cash buyers or mortgage information from other lenders.

National data shows house prices fell 5.3 per cent in the 12 months to September, while Halifax said prices fell 4.7 per cent in that period.

The latest research from the Royal Institution of Chartered Surveyors (Rics), which conducts a monthly poll of Rics agents, provides a snapshot of what is currently happening in the property market.

In recent months, the vast majority of respondents have said they have seen home prices fall.

And earlier this week, Rightmove reported that newly quoted asking prices increased by 0.5 percent in October compared to the previous month. This sounds positive until you take into account that this is the smallest increase in October since 2008.

Based on the past twenty years, the average asking price increase in October is 1.4 percent according to Rightmove.

Richard Harrison, head of mortgages at Atom Bank, expects house prices to continue to fall due to higher mortgage rates.

He said: ‘Prices continue to rise more slowly, with today’s data reflecting the challenging time the property market has faced so far in 2023, with rising interest rates negatively impacting the amount of buyers able to borrow and customer confidence .

‘There is, however, some reason for cautious optimism. Falling prices offer opportunities for first-time buyers, and many experts now believe that base rates have peaked, with mortgage prices falling over the past twelve weeks.

“This is unlikely to stimulate an immediate dramatic recovery in activity and prices, but it does reduce the potential of a more pronounced price decline as previously speculated by some commentators.”

Jeremy Leaf, North London estate agent and former chairman of Rics Residential, added: ‘These somewhat historical figures are more comprehensive than other studies as they are based on completions rather than offers, and include all sales, including cash and mortgages.

‘They are showing resilience at a time of great turbulence in the market due to rising mortgage rates.

‘The market remains price sensitive, although the stabilization of inflation and mortgage rates, as well as real wage growth, has improved affordability and led to more viewings and offers, especially for small single-family homes.

‘Very few forced sellers and low inventory levels mean prices are likely to continue falling rather than correcting significantly.’